Matter of Klarman, 155 A.D.3d 19

David S. Klarman, admitted 1991, pleaded guilty (Dec. 2, 2003) in U.S. District Court (N.D. Cal.) to mail fraud and money laundering allegations arising from a scheme (1996–1999) while he was General Counsel of U.S. Wireless to divert company stock to shell corporations he controlled.
As part of the plea, Klarman admitted causing issuance of 130,520 shares to a shell company and that the loss to U.S. Wireless exceeded $5.3 million; he repatriated ~$5.3 million and was sentenced (July 10, 2007) to three years’ probation and criminal monetary penalties.
Klarman did not notify the New York Court of his conviction as required by Judiciary Law § 90(4)(c); he certified retirement status with OCA and did not disclose the conviction for about 13 years.
The Appellate Division suspended Klarman on its own motion (Feb. 14, 2017) and referred him to a special referee to show cause why further discipline should not be imposed.
At the disciplinary hearing, the Special Referee found significant mitigation: cooperation with authorities, acceptance of responsibility, restitution, remorse, charitable efforts, and post-conviction attempts to lead an honest life; Klarman joined the Committee’s motion to confirm the referee’s mitigation findings and requested no further discipline.
The Court found the underlying scheme serious, that Klarman was not a minor participant, that his failure to timely report the conviction was an aggravating factor, and ordered disbarment effective immediately.

Issue	Petitioner’s Argument	Respondent’s Argument	Held
Whether to confirm the Special Referee’s findings as to mitigation	Confirm mitigation findings and impose appropriate discipline	Joins confirmation of mitigation and asks for no further discipline	Court confirmed referee’s mitigation findings
Appropriate disciplinary sanction for conviction of serious crime and related misconduct	Disbarment is warranted given scheme magnitude and failure to report conviction	Requests no additional discipline (cites mitigation and passage of time)	Disbarment effective immediately; failure to report is aggravating
Effect of failure to notify Court of conviction under Judiciary Law § 90(4)(c)	Failure to notify justifies consideration as aggravating conduct	Suggested uncertainty about obligation but acknowledged duty as attorney	Court treated nondisclosure as aggravating and contributing to harsher sanction